Is refusal to employ expensive and experimental treatments

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A common news story in any jurisdiction with single payer health care systems - for example, in Canada their socialized system does not allow private health care alternatives - is the battle that pits the government health system's refusal to pay for treatment against someone with a rare disease. Invariably these rare disease treatments are i) expensive ii) experimental (i.e., unproven).

a. Assume there are two treatments for two illnesses, call them 1 or 2. Assume the cost per treatment is c1 and c2. Rewrite the equi-marginal condition with these new variable names. If budget funds are allocated along this rule, what does this imply about the total value of health care provided, given the funds available?

b. Is the refusal to employ expensive and experimental treatments consistent with the condition in (a)? Explain.

c. If the government decides to pay for treatments that violate the condition in (a), what is the opportunity cost of such an action?

Reference no: EM131075091

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